Self Employment Income

Social Security analyzes self employment income differently than earnings that an individual earns by working for an employer in determining whether that work rises to a level that would disqualify an individual from receiving disability benefits. They use a three part test which is outline in Social Security Ruling 83-34.

The first test is to determine if a person is providing significant services or earning substantial income. If an individual provides significant services meaning they are the sole owner or operator or they provide more than half of the time needed to manage the business of they manage the company for more than 46 hours per month, they will not be entitled to benefits. Also, if an individual earns more than a given amount (this changes yearly but is $1170 for 2017) they will not be able to receive disability benefits.

If an individual is not providing significant services or making substantial income, Social Security will then do a comparability test to determine if you are being compensated fairly for the work that you are doing. They will compare your work and earnings with what an unimpaired person in your community would earn for similar types of work. They will look at job duties, skills used, work efficiency, time and energy expended at work and other factors to determine if you were being compensated fairly would you be earning over the substantial income amounts. If so, you will not be entitled to benefits.

Social Security also has a test that applies to individuals who might start a business, or begin doing freelance or contract work more than twenty four years after they first started receiving benefits. Individuals in that situation will not be terminated from benefits if their countable income is less than the allowed amount (again, it changes year to year, but for 2017 it is $1170). If income is more than the allowed amount, you can retain your benefits if you can show that you are not providing substantial services to the business. Also, benefits will not terminate right away, you have a trial work period of nine months to be able to work and not have your benefits reduced. However, it is always a good idea to inform Social Security of your earnings.

This information is very general and an attorney who is experienced in working with Social Security Disability and Supplemental Security Income benefits should be consulted if you are applying for benefits while you are self employed. Attorneys at Match and Farnsworth, PC are available to provide guidance at all levels of the application and appeals process. Feel free to contact us for assistance at 855-532-4556.